Large state-owned enterprises lose 32.9%; those with foreign funding 53.6%. Without demand from United States and Europe any economic recovery difficult. 100 million workers employed in tourism are in danger. Markets drop on fears of global contagion. Beijing's forecast economic growth now at 2.9% this year.
Beijing (AsiaNews / Agencies) – Chinese industrial profits plummeted by 38.3% on average in the first two months of the year, due to the effect of coronavirus. The National Statistical Office has reported that earnings of Chinese industries stopped at around 411 billion yuan (52 billion euros): a drastic drop compared to the same period of 2019.
Large state-owned companies lost 32.9%, joint-stock companies 33.6% and private companies 36.6%. Companies financed with foreign capital and with funds from Hong Kong, Macao and Taiwan registered the biggest losses (-53.6%).
According to official statistics, economic activity in China has resumed almost at full speed. The spread of contagion in the rest of the world, however, limits the prospects of short term gains for a nation whose economic output is for the most part rooted in exports, especially towards Europe and the United States, which are currently the new hot fronts of the epidemic crisis.
The tourism sector is among the most affected. The restrictions imposed by the government on travel to and from China threaten a market of 100 million workers in the country: 10% of the national workforce, which in 2019 generated about 11 trillion yuan (1400 billion euros).
Despite the huge amount of liquidity injected into the financial system by the Chinese central bank (over 1000 billion yuan) and other major world economies, the rate of spread of Covid-19 outside of China creates is making investors nervous. Shanghai stock exchange ratcheted up loses of 0.9% at closing; Shenzhen is down 2.03%. Hong Kong is also in negative territory (-1.30%).
Shanghai and Shenzhen partially recovered after the announcement of the new interest rate cut by the Central Bank. It is the second reduction after the one decided in February, and the most significant (from 2.4 to 2.2%) after that of 2015. Due to the virus, the major analysis institutes predict a strong slowdown in the growth of Chinese GDP: from 6.1% in 2019 to 2.9% this year.